Nvidia Corp. has received about $85 billion of orders for its jumbo debt offering, underscoring relentless investor appetite for exposure to financing tied to the artificial intelligence boom.
The chipmaking giant is seeking to raise at least $20 billion from a bond sale on Monday, while the size of the offering could still be boosted, according to people with knowledge of the matter. Demand exceeded four times that minimum amount at its peak, one of the people said, asking not to be identified because they aren’t authorized to speak publicly.
Companies like Alphabet Inc. and Amazon.com Inc. have been flooding the debt markets with hundreds of billions of dollars of bond sales as they build data centers and other infrastructure needed for AI’s rapid expansion. Investors have so far readily absorbed the supply.
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Nvidia is often a supplier for these projects, becoming a cornerstone for the AI ecosystem and also the biggest company in the world by market value in the process. It is spending heavily to support an ecosystem of companies that will help build demand for artificial intelligence. Last year, it decided to take a $5 billion stake in chipmaker Intel Corp., and invest as much as $10 billion in model maker Anthropic PBC. The company agreed to contribute $30 billion to a massive funding round for OpenAI, the latter said in February. It’s also boosting payouts to shareholders.
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Like many big tech companies, Nvidia is generating heavy profit and cash flow from the artificial intelligence boom. The company is expected to generate more than $200 billion in free cash flow in the fiscal year ending Jan. 31, according to the average of analyst estimates compiled by Bloomberg.
Nvidia is selling notes in seven parts with maturities ranging from two to 30 years. The offering is Nvidia’s first in five years and is expected to be at least four times larger than each of its two previous debt offerings, in 2020 and 2021.
The yield on the longest portion has tightened by 0.25 percentage point from initial price talk to 0.65 percentage point more than Treasuries, a separate person said. Proceeds from the sale will refinance outstanding debt, among other uses, the person said.
Nvidia is set to benefit from lower borrowing costs, with an agreement between the US and Iran to end their conflict helping fuel a rally in the bond market. A measure of risk for investment-grade debt has fallen to its lowest level since early February, before the conflict began.
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A relatively cheap, long-dated debt sale could help lower Nvidia’s average cost of capital and enhance the funding of strategic AI partnerships, including with OpenAI, without weakening its AA credit profile, Bloomberg Intelligence analyst Robert Schiffman wrote in a note to clients.
Representatives for JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, the banks running the offering, declined to comment. A Nvidia spokesperson referred requests for comment to the company’s filing on the offering.
